<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
-----------------------------------------------------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1996
-----------------------------------------------
Commission File No. 0-10061
AMERICAN CASINO ENTERPRISES, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
Nevada 04-2709807
------ ----------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
6787 W. Tropicana, Ste 200, Las Vegas, Nevada 89103
- --------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(702) 227-9800
--------------
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address & former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding at
Class December 10, 1996
----- -----------------
<S> <C>
Common Stock, $.01 Par Value 14,867,958
</TABLE>
<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 1996 AND JULY 31, 1996
<TABLE>
<CAPTION>
OCTOBER 31, JULY 31,
1996 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $10,551,000 $12,578,000
Consulting fee and other receivables 123,000 202,000
Refundable and prepaid income taxes 72,000 187,000
Deferred tax asset 2,000 2,000
Prepaid expenses 94,000 45,000
----------- -----------
Total current assets 10,842,000 13,014,000
----------- -----------
Property and equipment, net 215,000 214,000
----------- -----------
Other assets:
Consulting agreement acquisition costs, net 305,000 275,000
Deposits and other 161,000 133,000
Deferred tax asset 44,000 --
Land held for investment or future development 5,202,000 --
----------- -----------
5,712,000 408,000
----------- -----------
$16,769,000 $13,636,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 70,000 $ 51,000
Accrued expenses 131,000 --
Advance payment of consulting fees 90,000 --
Income taxes payable 164,000 296,000
Current portion of long-term debt 15,000 --
----------- -----------
Total current liabilities 470,000 347,000
----------- -----------
Minority interest in consolidated subsidiary 25,000 --
Long-term debt, less current portion 1,658,000 --
----------- -----------
1,683,000 --
----------- -----------
Commitments -- --
Shareholders' equity:
Common stock, $.01 par; 30,000,000 shares
authorized; 14,867,958 and 14,367,958
shares issued and outstanding 149,000 144,000
Preferred stock, $.01 par; 10,000,000 shares
authorized; shares issued and outstanding - none -- --
Capital in excess of par 3,333,000 3,213,000
Capital in excess of par - warrants 110,000 --
Retained earnings 11,024,000 9,932,000
----------- -----------
14,616,000 13,289,000
----------- -----------
$16,769,000 $13,636,000
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE> 3
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED OCTOBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Revenues:
Casino consulting fees $ 2,220,000 $ 2,560,000
------------ ------------
Costs and expenses:
Casino consulting 294,000 285,000
General and administrative 283,000 147,000
Amortization and depreciation 35,000 20,000
------------ ------------
612,000 452,000
------------ ------------
Income from operations 1,608,000 2,108,000
------------ ------------
Other income (expense):
Other income - interest 170,000 95,000
Other expense - interest (2,000) --
------------ ------------
168,000 95,000
------------ ------------
Income before income taxes 1,776,000 2,203,000
------------ ------------
Income tax benefit (expense):
Current:
State (127,000) (151,000)
Federal (601,000) (360,000)
Deferred:
State 7,000 --
Federal 37,000 (339,000)
------------ ------------
(684,000) (850,000)
------------ ------------
Net income 1,092,000 1,353,000
============ ============
Earnings per common share and
common share equivalent $ 0.07 $ 0.09
============ ============
Weighted average number of common shares
and common share equivalents 16,009,000 15,692,000
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED OCTOBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,092,000 $ 1,353,000
------------ ------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization and depreciation 35,000 20,000
Deferred income tax expense (benefit) (44,000) 339,000
Warrants issued for services 110,000 --
Minority interest in consolidated subsidiary 25,000 --
Changes in other assets and liabilities, net 171,000 502,000
------------ ------------
297,000 861,000
------------ ------------
Net cash provided by operating activities 1,389,000 2,214,000
------------ ------------
Cash flows from investing activities:
Property and equipment, net (12,000) (13,000)
Land held for investment or future development (5,202,000) --
------------ ------------
Net cash used by investing activities (5,214,000) (13,000)
------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt 1,673,000 --
Proceeds from issuance of common stock 125,000 --
------------ ------------
Net cash provided by financing activities 1,798,000 --
------------ ------------
Net increase (decrease) in cash (2,027,000) 2,201,000
Cash, at beginning of period 12,578,000 8,841,000
------------ ------------
Cash, at end of period $ 10,551,000 $ 11,042,000
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for state and federal income taxes $ 450,000 $ 495,000
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEAR ENDED JULY 31, 1996 AND THREE MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
CAPITAL
COMMON STOCK CAPITAL IN EXCESS
---------------------- IN EXCESS OF PAR - RETAINED
SHARES DOLLARS OF PAR WARRANTS EARNINGS
---------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
Balance, July 31, 1995 14,367,958 $144,000 $3,213,000 $ $ 6,136,000
Net income for the year 3,796,000
---------- -------- ---------- -------- -----------
Balance, July 31, 1996 14,367,958 144,000 3,213,000 9,932,000
Issuance of shares 500,000 5,000 120,000
Issuance of warrants 110,000
Net income for the period 1,092,000
---------- -------- ---------- -------- -----------
Balance, October 31, 1996 14,867,958 $149,000 $3,333,000 $110,000 $11,024,000
========== ======== ========== ======== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
As permitted by the Securities and Exchange Commission (SEC) under Rule 10-01 of
Regulation S-X, the accompanying consolidated financial statements and notes
have been condensed and, therefore, do not contain all disclosures required by
generally accepted accounting principles. The consolidated financial statements
include the accounts of American Casino Enterprises, Inc. and its subsidiaries
("the Company"). All significant intercompany accounts and transactions have
been eliminated. For additional disclosures, refer to the Annual Report on Form
10-KSB of the Company for the year ended July 31, 1996.
In the opinion of the Company, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for the interim
periods.
Certain amounts in the interim period financial statements for Fiscal 1996 have
been reclassified for comparability with the current period presentation.
The computations of earnings per common share and common share equivalents are
based on the weighted average number of common share and common share
equivalents outstanding. Stock purchase warrants and options outstanding and
exercisable at or below the market price are considered common share
equivalents. Fully diluted earnings per share is not presented because the
effect would be antidilutive or the dilutive effect is less than three percent.
Results of the interim periods are not necessarily indicative of those to be
expected for the full year.
NOTE 2 - CONSULTING AGREEMENTS
TABLE MOUNTAIN CASINO & BINGO
The Company has a consulting agreement with the Table Mountain Tribe for the
Table Mountain Casino.
On February 1, 1996, the Company signed a new consulting agreement with the
Table
6
<PAGE> 7
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
Mountain Band of Indians (the "Table Mountain Tribe") for the Table Mountain
Casino & Bingo (the "Casino") in Friant, California. The new consulting
agreement has a duration of 27 months, and provides that the Company will
receive a base monthly consulting fee of $90,000, plus an additional $90,000 for
each increment of $500,000 or portion thereof, of Casino monthly net income in
excess of the first $1.5 million of net income from casino operations.
Additionally, effective February 1, 1996, the Company and the Table Mountain
Tribe signed a termination agreement of the March 1993 agreement under which a
monthly payment of $350,000 will be paid to the Company for a term of 48 months,
subject to meeting certain thresholds.
The prior consulting agreement provided for consulting fees equal to 35% of the
Casino's net income before consulting fees. For the period from June 19, 1995 to
February 1, 1996, the Company paid a concession to the Table Mountain Tribe
equal to seven percent (7%) of the Casino's net income before consulting fees.
During the three month period ended October 31, 1995, the concession totaled
$638,000. Consulting fee revenue is reported net of the concession to the Table
Mountain Tribe.
UNITED AUBURN INDIAN COMMUNITY
In February 1996, the Company formed a joint venture with the Table Mountain
Tribe to provide consulting services to the United Auburn Indian Community (the
"Auburn Tribe"). The joint venture will assist in the development of a Class II
casino to be built and owned by the Auburn Tribe near Sacramento, California.
The joint venture will also train tribal members in operating the casino. The
Company has an 80% interest in the joint venture.
In February 1996, the joint venture entered into a consulting agreement with the
Auburn Tribe. Compensation to the joint venture for the consulting agreement is
structured as a base consulting fee of $150,000 per month, with additional fees
of $37,500 paid for each increment of $250,000 of net income between $1,000,000
and $3,000,000, and $31,250 paid for each increment of $250,000 of net income
over $3,000,000. The consulting fee payments will commence when the casino
becomes operational and continue for a five year term.
The joint venture is committed to advance to the Auburn Tribe capital for land
acquisition, pre-development costs, and Tribal needs. Advances will begin to be
repaid with interest after the casino begins operations. Advances to the Auburn
Tribe by the Company at October 31, 1996 totaled approximately $118,000 and are
reported as
7
<PAGE> 8
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
deposits and other in the accompanying balance sheet.
The Auburn Tribe is in the process of acquiring land for the casino. If and when
the Auburn Tribe acquires the land, it will be placed into trust by the Bureau
of Indian Affairs. At the time the land is placed into trust, a one-time fee of
$125,000 will be paid by the joint venture to the Auburn Tribe. The Auburn Tribe
will also receive options to acquire 150,000 shares of American Casino
Enterprises, Inc.'s common stock at the then-current market price. A monthly
payment of $22,500 for Tribal needs will be made by the joint venture to the
Auburn Tribe until the gaming facility is operational. The Company's share of
these payments are reported in the accompanying balance sheet as consulting
agreement acquisition costs. At October 31, 1996, $162,000 had been capitalized.
NOTE 3 - CONSULTING AGREEMENT ACQUISITION COSTS
TABLE MOUNTAIN CASINO & BINGO
Consulting agreement acquisition costs are amortized over the life of the
consulting contract with the Table Mountain Tribe. The amortization period was
84 months for the first six months of Fiscal 1996. The amortization period will
be 27 months, the length of the new consulting agreement, for periods after
February 1, 1996.
UNITED AUBURN INDIAN COMMUNITY
Interim payments to the Auburn Tribe for Tribal needs are being capitalized and
will begin to be amortized, after the casino is operational, over the period of
the contract.
NOTE 4 - LAND ACQUISITION
In October 1996, the Company entered into an agreement to purchase approximately
162 acres of land in Las Vegas, Nevada. The total purchase price of the land was
$5,202,000, consisting of approximately $3,600,000 in cash with the remaining
amount representing an assumption of a mortgage on the land. In connection with
the purchase, the Company granted an option to the seller of the land to
repurchase the land. This option, which expires on February , 1997, stipulates
that the purchase price for the land by the optionee shall be the sum of the
outstanding balance of the mortgage, the cash portion of the purchase price paid
by the Company, all cash payments made on the mortgage by the Company, and an
amount equal to the greater of 16% of the purchase price or 50% of the profits
if the optionee sells the land.
8
<PAGE> 9
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
NOTE 5 - FORMATION OF NEW SUBSIDIARY
In September 1996, the Company formed a new subsidiary, G & L Acquisition Corp.
("G & L"). G & L will pursue business opportunities involving the establishment
or acquisition of a California card room, a gaming business located on a ship
which sails to international waters from home ports in the United States or
elsewhere and/or a leisure business. The Company owns 7,000,000 of the
outstanding shares of G & L. Currently, G & L is offering shares of its common
stock for sale through a private placement to "accredited investors" as such
term is defined in Regulation D under the Securities Act of 1933. The private
placement is offering a minimum of 1,860,000 shares and a maximum of 2,000,000
shares for sale, at a price of $1.55 per share. The subscription period ends on
January 2, 1997. In the event the minimum number of shares are not sold, all
monies received from subscribers will be refunded, without interest.
NOTE 6 - LITIGATION
AMERICAN CASINO ENTERPRISES, INC.
On July 15, 1994, the Chairman of the National Indian Gaming Commission ("NIGC")
issued a Notice of Violation and a separate Notice to Show Cause to the Company.
The Notice of Violation charged that the Company was in violation of certain
provisions of the Indian Gaming Regulatory Act ("IGRA") and the NIGC's
regulations, in that the Company had allegedly; (1) engaged in management of the
Table Mountain Casino & Bingo without an approved management contract beginning
on November 1, 1990; and (2) operated illegal video gaming devices and
house-banked blackjack games without a Class III gaming compact with the State
of California.
On February 1, 1996, the Company entered into a settlement agreement with the
NIGC. The settlement agreement resolved all issues associated with the Notice of
Violation and the Notice to Show Cause.
In the settlement, the NIGC agreed to fully withdraw any and all allegations,
charges and claims against the Company. In turn, the Company, without admitting
or denying the NIGC allegations, agreed to pay a civil fine of $500,000, and to
terminate its 1993 amended agreement with the Table Mountain Tribe. The civil
fine was accrued at January 31, 1996 and charged to operations for the period
then ended.
9
<PAGE> 10
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
On February 1, 1996, the Company signed a new consulting agreement and entered
into a termination agreement with the Table Mountain Tribe (See Note 2).
TABLE MOUNTAIN CASINO
In 1992, the National Indian Gaming Commission promulgated regulations stating
that Indian casinos could not offer certain games, including electronic gaming
machines, such as the Table Mountain Tribe's video pull tab gaming devices,
without state approval under tribal-state compacts. Several tribes sought a
compact to engage in full casino gaming, however, the State of California
refused to allow certain games.
In May 1992, the Tribe and other California Indian tribes filed a lawsuit in
Federal court against the State of California and its Governor over the scope of
gaming permissible on Indian land, captioned as Rumsey v. Wilson. In July 1993,
the Federal District Court ruled that the proposed electronic games are a proper
subject of negotiation with Tribal State Compact and that the tribes and State
should negotiate to determine whether other banked and percentage card games
will be permitted under a tribal-state compact. The State of California appealed
the District Court decision in Rumsey v. Wilson.
In November 1994, the U.S. Court of Appeals for the Ninth Circuit reversed in
part the July 1993 ruling by the District Court in favor of the tribes, and
remanded the case to the District Court for additional fact finding. The
remanded issue is whether California law permits the use of video gaming
devices. If California law is found to permit the use of video gaming devices,
the tribes are entitled to seek agreements for the use of such devices. If
California is not found to permit their use, the tribes would not be so entitled
under the Court of Appeals' analysis.
In December 1994, the tribes filed a petition for rehearing with the Ninth
Circuit and a suggestion for rehearing en banc. The petition and suggestion were
denied on August 11, 1995, with a vigorous dissent by six judges. On August 21,
1995, the Ninth Circuit issued an order requesting further briefing by the
parties on the relevance of a state court decision entitled Western Telcon v.
California State Lottery. In Western Telcon, the issue was whether the State
Lottery could operate banked games and utilize slot machines. On October 16,
1995, the Ninth Circuit stayed its final decision in Rumsey until the final
disposition of Western Telcon by the California Supreme Court and requested the
parties to file briefs with the Ninth Circuit after that decision.
10
<PAGE> 11
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
On June 24, 1996, the California Supreme Court decided Western Telcon. The court
held that the California State Lottery could not "bank" games, but it left open
the possibility that certain types of electronic devices could be used to play
non-banked games, and cited with approval the Lottery's use of on-line computers
and video terminals as consistent with the State Lottery Act. The parties filed
their briefs in Rumsey on July 23, 1996, and the case is now pending.
While the Company is optimistic the California tribes will ultimately prevail in
this action, should the State of California be successful in its legal actions,
it could have an adverse effect on the Company's sole business activity.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 1996 VERSUS THREE MONTHS ENDED
OCTOBER 31, 1995
REVENUES
Casino consulting fees in the three months ended October 31, 1996 (the "Fiscal
1997 Period") decreased 13.3% to $2,220,000 from $2,560,000 for the same period
in Fiscal 1996, and were derived from the consulting agreement the Company has
with the Table Mountain Band of Indians (the "Tribe") for the operation of the
Table Mountain Casino & Bingo (the "Table Mountain Casino"), which is located
near Fresno, California.
On February 1, 1996, the Company signed a new consulting agreement with the
Table Mountain Tribe for the Table Mountain Casino in Friant, California. The
new consulting agreement has a duration of 27 months, and provides that the
Company will receive a base monthly consulting fee of $90,000, plus an
additional $90,000 for each increment of $500,000 or portion thereof, of
casino's monthly net income in excess of the first $1.5 million of net income
from casino operations. Additionally, effective February 1, 1996, the Company
and the Table Mountain Tribe signed a termination agreement of the March 1993
agreement under which a monthly payment of $350,000 will be paid to the Company
for a term of 48 months, subject to meeting certain thresholds.
The prior consulting agreement provided for consulting fees equal to 35% of the
Casino's net income before consulting fees. Also, for the period from June 19,
1995 to January 31, 1996, when the concession ceased, the Company paid a
concession to the Table Mountain Tribe equal to seven percent (7%) of the net
income, before consulting fees, of the Casino. During the three month period
ended October 31, 1996, the concession totaled $638,000. Consulting fee revenue
is reported net of the concession to the Table Mountain Tribe.
COSTS AND EXPENSES
Casino consulting expenses in the three months ended October 31, 1996, increased
to $294,000, up by 3.2%, from $285,000 in the comparable quarter in Fiscal 1996.
General and administrative expenses in the first quarter of Fiscal 1997
increased by $136,000 or 92.5% over the comparable quarter of Fiscal 1996. The
increase is attributable mainly to expenses related to the value of stock
purchase warrants issued to the Company's investment banker for services
rendered ($110,000). The warrants
12
<PAGE> 13
are exercisable at the closing price of the Company's common stock on the grant
date of the warrants ($1.38).
Amortization and depreciation was $35,000 and $20,000 in the three months ended
October 31, 1996 and 1995, respectively. Amortization is comprised of consulting
agreement acquisition costs, which are being amortized over the term of the
Table Mountain Casino consulting agreement.
OTHER OPERATIONAL ITEMS
Interest income, represented principally by interest on time deposits with
financial institutions, totaled $170,000 and $95,000 in the three months ended
October 31, 1996 and 1995, respectively.
The Company recorded provisions of $127,000 and $151,000 for State of California
income taxes for the three month periods ended October 31, 1996 and 1995,
respectively. Additionally, a deferred state income tax benefit of $7,000 was
recorded for the three months ended October 31, 1996.
Provisions of $601,000 and $360,000 were recorded for Federal income taxes
currently payable for the three month periods ended October 31, 1996 and 1995,
respectively. A deferred tax benefit of $37,000 was recorded for the three
months ended October 31, 1996 and deferred tax expense for the three months
ended October 31, 1995 totaled $339,000.
Net income for the three months ended October 31, 1996 was $1,092,000 or $0.07
per common share and common share equivalent compared to $1,353,000 or $0.09 per
common share and common share equivalent for the three months ended October 31,
1995.
LIQUIDITY AND CAPITAL RESOURCES AT OCTOBER 31, 1996 AND
THE THREE MONTHS THEN ENDED
At October 31, 1996, the Company had consolidated working capital of
$10,372,000, as compared with working capital of $12,667,000 at July 31, 1996.
The change resulted principally from a combination of increases of prepaid
expenses ($49,000), accounts payable ($19,000), advance payment of consulting
fees ($90,000), accrued expenses ($131,000), refundable and prepaid income taxes
($115,000) and decreases of cash ($2,027,000), consulting fee and other
receivables ($79,000), and income taxes payable ($132,000).
During the first three months of Fiscal 1997, the Company used $5,214,000 in
investing activities as compared to $13,000 used by investing activities in the
first three months of Fiscal 1996. Cash was used in investing activities in
Fiscal 1997 to acquire the
13
<PAGE> 14
undeveloped land near Las Vegas ($5,200,000) and to acquire additional office
furniture and equipment and leasehold improvements ($12,000). The Company is
evaluating various opportunities and proposed uses for the land.
Financing activities for the three month period ended October 31, 1996 were
comprised of the assumption of a mortgage payable ($1,673,000) and the proceeds
from the exercise of 500,000 options ($125,000). There were no financing
activities during the first three months of Fiscal 1996.
In October 1996, G & L Acquisition Corp., a majority owned subsidiary, began a
private placement of a portion of its stock. If successful, the net proceeds
will be used to evaluate and acquire or establish gaming or leisure industry
businesses. Net proceeds to G & L assuming the placement is successful should at
least approximate $2,400,000, the Minimum Offering. At October 31, 1996, funds
raised by the private placement were held in escrow and are not reported on the
accompanying balance sheet. If the minimum amount of stock, as defined in the
Private Placement Memorandum, is not sold, all monies will be returned to the
investors, without interest.
Historically, the Company has provided funds for its operations from operating
activities, financing from financial institutions and shareholders, and issuance
of common stock and it will likely continue to do so in the future. The Company
has continues to seek other suitable consulting contracts and/or ownership of
casinos and other gaming opportunities on and off Indian land, as well as
recreational, leisure time and entertainment ventures. In the event any of these
opportunities come to fruition, management will consider satisfying necessary
financing from working capital, borrowing or capital infusion through public or
private placement of common stock of the Company or its subsidiaries.
At October 31, 1996, the Company had revolving lines of credit totaling
$2,000,000 with two banks. One line for $1,000,000 expires in December 1996 and
bears interest at 2.5% above prime. The line is collateralized by certificates
of deposit totaling $500,000. The Company expects to renew this line under
similar terms in December 1996. The other $1,000,000 line of credit is
unsecured, expires in November 1997 and bears interest at 1% above an indexed
prime (8.25% at October 31, 1996). At October 31, 1996, no funds were
outstanding on the lines of credit.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERICAN CASINO ENTERPRISES, INC.
Dated: December 10, 1996 By: /s/ Ronald J. Tassinari
Las Vegas, Nevada -------------------
Ronald J. Tassinari
President
(Principal Executive Officer)
/s/ Roy K. Keefer
-------------
Roy K. Keefer
Chief Financial Officer
(Principal Financial
and Accounting Officer)
15
<PAGE> 16
PART II
OTHER INFORMATION
Item 5. Other Information
See Part I. Notes 4 and 5 of Notes to Consolidated Financial
Statements.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
11.01 Computation of Earnings Per Share 18
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company during the
quarter ended October 31, 1996.
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
PAGE
EXHIBIT DESCRIPTION NUMBER
- ------- ----------- ------
<S> <C> <C>
11.01 Schedule of Computation of Earnings Per Common Share 18
And Common Share Equivalent
</TABLE>
17
<PAGE> 1
EXHIBIT 11.01
AMERICAN CASINO ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE OF COMPUTATION OF EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENT
THREE MONTHS ENDED OCTOBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
PRIMARY:
Net income $ 1,092,000 $ 1,353,000
=========== ===========
Weighted average number of common shares
outstanding during the period 14,867,958 14,367,958
Add:
Common stock equivalents (determined
using the "treasury stock" method) representing
shares issuable upon exercise of options
and warrants 1,141,369 1,323,744
----------- -----------
Weighted average number of shares used in
calculation of primary income per share 16,009,327 15,691,702
=========== ===========
PRIMARY EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENT $ 0.07 $ 0.09
=========== ===========
FULLY DILUTED:
Net income $ 1,092,000 $ 1,353,000
=========== ===========
Weighted average number of common shares
outstanding during the year 14,867,958 14,367,958
Add:
Common stock equivalents (determined
using the "treasury stock" method) representing
shares issuable upon exercise of options
and warrants 1,485,297 1,595,665
----------- -----------
Weighted average number of shares used in
calculation of fully diluted income per share 16,353,255 15,963,623
=========== ===========
FULLY DILUTED EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENT $ 0.07 $ 0.09
=========== ===========
</TABLE>
NOTE: Fully diluted earnings per common share and common share
equivalent is not presented in the Consolidated Statements of Income
and Retained Earnings because the effect is antidilutive or the dilutive
effect is less than three percent.
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1996
<PERIOD-END> OCT-31-1996
<EXCHANGE-RATE> 1
<CASH> 10,551,000
<SECURITIES> 0
<RECEIVABLES> 123,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,842,000
<PP&E> 215,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,769,000
<CURRENT-LIABILITIES> 470,000
<BONDS> 0
0
0
<COMMON> 149,000
<OTHER-SE> 14,467,000
<TOTAL-LIABILITY-AND-EQUITY> 16,769,000
<SALES> 2,220,000
<TOTAL-REVENUES> 2,220,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 612,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,000
<INCOME-PRETAX> 1,776,000
<INCOME-TAX> 684,000
<INCOME-CONTINUING> 1,092,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,092,000
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
</TABLE>
